Cabinet approves continuation of Credit Guarantee Fund for Micro Units
PIB National (English) · Published 11 November 2026 · Last updated
The Union Cabinet has approved the continuation of the Credit Guarantee Fund for Micro Units scheme for five years up to March 31, 2031, to back micro enterprise and Mudra loans against default risks.
Key points
- The Union Cabinet, chaired by Prime Minister Shri Narendra Modi, approved the continuation of the Credit Guarantee Fund for Micro Units for a period of five years up to 31.03.2031.
- The scheme provides credit guarantee coverage to lending institutions through the National Credit Guarantee Trustee Company Limited against default risk.
- As of September 2026, more than 60.36 crore loans amounting to Rs.43.34 lakhs crore have been sanctioned under the Pradhan Mantri Mudra Yojana since its launch.
- The CGFMU was originally launched in January 2016 to act as a major catalyst in enabling the growth of PMMY loans across the country.
- Eligible credit facilities under the fund include loans extended to eligible micro enterprises under Pradhan Mantri Mudra Yojana up to Rs.20 lakh.
- The scheme covers overdrafts of up to Rs.10,000 provided by banks under Pradhan Mantri Jan Dhan Yojana accounts and loans granted to Self Help Group portfolios between Rs.10 lakh to Rs.20 lakh.
- The guarantee fee for the scheme decreases from 1% per annum to 0.75% per annum, while the SHG fee remains unchanged at 0.25% for the first year and 0.50% in subsequent years.
- The extended scheme will be applicable to all loans extended under Pradhan Mantri Mudra Yojana during the XVIth Finance Commission Cycle from FY 2026-27 to FY 2030-31.
- The extension of the CGFMU scheme is projected to enable loans worth Rs.12.6 lakh crore over the next five years.
- The Cabinet also approved the continuation of the Stand-Up India Scheme on 11 November 2026 to promote entrepreneurship among women, scheduled castes, and scheduled tribes with a corpus of Rs.4,111 crore.
Background
- The Credit Guarantee Fund for Micro Units was launched in January 2016 to provide institutional backing to micro enterprise lending.
- The Pradhan Mantri Mudra Yojana established a formal credit framework that expanded financial access for borrowers previously excluded from the formal banking system.
Prelims facts and Mains angle for this issue are in the full SWAदेSH note.
Original report: PIB National (English)